Fresh inflows of foreign funds, coupled with positive global cues and rupee appreciation propelled the Indian equity markets yesterday.
Besides, positive global indices, stimulus hopes from the European Central Bank (ECB) in its upcoming monetary policy review, and commercial banks reducing lending rates, enhanced the risk-taking appetite.
The key Indian indices closed with substantial gains – more than 1.5% each – as healthy buying was witnessed in all the 19 sub-indices of the BSE.
The wider 51-scrip Nifty of the National Stock Exchange (NSE) gained by 144.80 points or 1.79% to 8,246.85 points.
Similarly, the barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 26,366.52 points, closed at 26,694.28 points – up 457.41 points or 1.74% from the previous close at 26,236.87 points.
The Sensex touched a high of 26,733.87 points and a low of 26,357.35 points during the intra-day trade.
The BSE market breadth was skewed in favour of the bulls – with 1,827 advances and 814 declines.
On Wednesday, the equity markets slipped after the Reserve Bank of India (RBI) decided to keep its key lending rates unchanged in its fifth bi-monthly monetary policy of 2016-17.
The barometer index was down 155.89 points or 0.59%, while the NSE Nifty edged down by 41.10 points or 0.50%.
“Markets zoomed higher yesterday as it shrugged off the decision by the RBI (yesterday) to keep repo rates unchanged,” Deepak Jasani, Head of retail research, HDFC securities, told IANS. “The Nifty opened on a positive note and rallied throughout the trading session on the back of positive Asian and European markets, which in turn were aided by an overnight gain in the US indices.”
Moreover, the Indian rupee appreciated by 28 paise to close at 67.36 against a US dollar from its previous close of 67.64 to a greenback.
“Indian rupee open on a positive note against the dollar and tested three-week high on the back of sustained selling of the US currency by exporters and banks amid a higher opening in the domestic equity markets accompanied by foreign fund inflows,” SMC Global Securities told in a commentary to IANS.
“Moreover, weakness in the dollar against other currencies overseas also supported the rupee.”
The stock brokerage firm further said the withdrawal of incremental CRR (cash reserve ratio) hike stimulated the sentiment of the market participants further as now bank can move their money from CRR to the recently launched market stabilisation scheme (MSS).
According to Dhruv Desai, director and chief operating officer of Tradebulls, most sector stocks traded with firm sentiments either due to short covering or lower levels buying.
“Bearish USD/INR futures prices supported the recovery in the Indian equity markets in the intra-day session,” Desai said.
A cashier displays the new 2000 Indian rupee banknotes inside a bank in Jammu. The currency appreciated by 28 paise to close at 67.36 against the US dollar yesterday.
